High-tax state exodus seen accelerating as controversial SALT cap may be here to stay
Big money flees high-tax states
Point View Wealth Management’s David Dietze and Texas Congressman Lance Gooden (R) on big money’s flight from high-tax states.
If the Trump administration gets its way, the controversial $10,000 cap on state and local tax deductions won’t be going anywhere anytime soon.
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The White House is working on a Tax Cuts 2.0 package, which senior administration officials told FOX Business on Friday will aim to extend the provision past 2025 when it is currently set to expire.
White House National Economic Council Director Larry Kudlow told reporters on Friday that the Tax Cuts 2.0 package would once again focus on providing tax relief to middle-class families – and the administration is aiming to put it out around the middle of 2020.
Of course 2020 is an election year, so whether the current administration would be able to pass another tax cuts package is uncertain.
The $10,000 SALT cap has caused pain for high-tax states – and their residents – since it is well below the average amounts claimed by individuals residing in states such as New York, California and New Jersey. Before the cap, the average deduction claimed in California, for example, was $22,000, according to Kevin de Leon, a Democratic member of the California state senate.
As a result, wealthier taxpayers have left these states for no-income tax destinations like Florida. While Florida received more movers than any other state last year, New York's outflows to the Sunshine State were the highest – 63,772 people.
New York had the third-largest outflows of any state, with 452,580 people moving out within the past year. California, another high-tax state, had the largest outflow of domestic residents – with the highest proportion of people headed to Texas, Arizona and Washington.
Exodus just beginning
Experts told FOX Business the exodus is just beginning – and will accelerate as people become increasingly frustrated by heightened tax liabilities.
According to data provided to FOX Business by Geoffrey Weinstein, special counsel in the Tax, Trusts & Estates Department of Cole Schotz, an individual or couple earning $650,000 in ordinary income could save $69,719 per year by moving from New York to Florida.
New York Gov. Andrew Cuomo credited the SALT cap and the flight of the wealthy for a $2.3 billion budget deficit in the state – calling the fiscal situation in the state “as serious as a heart attack.”
Some states, including New York, had devised ways to circumvent the cap – the most popular of which was officially squashed by the Treasury Department in June.
New York, New Jersey and Connecticut have filed a lawsuit challenging that ruling.
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FOX Business' Blake Burman contributed to this article.
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